Zinnov hosts quarterly CXO Forums for Centre Heads of India R&D centres of global MNCs to discuss and help leaders’ foresee and gain perspectives on pressing issues, through cross-pollination of learnings.
This article is based on excerpts from the last forum held on 26th November 2021. The topic of deliberation was Foresight 202X which focused on building a new value proposition for Indian GCCs around Innovation.
Indian start-ups have put the country on the map for Innovation – in 2021, India had 40+ unicorns emerge along with the widely spoken about Indian SaaS revolution. CXOs of Fortune 10 companies have demonstrated their intention to leverage India’s talent and innovation ecosystem to drive growth. In fact, a recent Nasscom Zinnov GCC study showed that ~60% of HQ leaders would like to drive Breakthrough and Transformative Innovation from their Indian R&D Centres (GCCs).
Historically, India has been an attractive location for R&D due to high-quality talent available at a cost arbitrage. While innovation has often been the reason for setting up GCCs, the on-ground reality is very different. A recent Innovation Benchmark study by Zinnov found that 84% of Indian GCCs have very nascent innovation capabilities – meaning innovation is still a white space.
As we wrap up the year and plan for 2022 and beyond, the GCC leaders attending the forum strongly agreed on the need to build Innovation as the primary value proposition of India. Deliberating on pathways to change the current state, GCC leaders shared journeys, voiced their challenges and reflected on possible solutions for building innovation capabilities from India that deliver tangible business impact.
Many leaders expressed that getting an innovation budget sanctioned is a challenge that deters most from pursuing Innovation. But a contrarian viewpoint brought to the table was that budgets are not the real problem, and if there is a real opportunity, global leaders can always find the money to invest.
The key to unlocking the budget is two-fold perseverance and evidence –
Another important aspect highlighted by GCC leaders was that if a centre wants to transition into an innovation hub, the Center Persona is a critical question to think about sooner rather than later. It becomes the guiding force for local leadership on the kind of work they want to do and the teams they want to build.
With India’s high-quality talent pool, it is common for the HQ to want to expand its teams rapidly in India. However, the work these teams do is the capability the centres build. Without a clear persona and vision, the India centres could likely attract more operational work than strategic projects. GCCs with a clear persona are laser-focused and ruthlessly prioritize the India team’s work portfolio, thus making enough room to pursue long-term Innovation from the Center.
Leaders shared a few interesting approaches for sustaining the Center Persona:
The GCC leaders highlighted several challenges with building sustainable long-term innovations from remote geographies like India. Many of them saw employees struggle with big ideas – the solutions proposed to look great on paper, but they often don’t meet the business needs.
For a long time, the ecosystem felt the central gap was that many ideas were not close to any end market and customer. But a key point highlighted at the forum was that the real gap is two-fold – alignment to customers and the business.
Leaders pointed out that it is incorrect to assume the workforce understands business’ core strategy and decision-making process. Apart from customer-centricity initiatives, it is imperative to educate the workforce on the decision and risk-taking process of a business.
The workforce needs to understand their firm’s strategy and anchor what they propose, to align with the business’ focus areas. If the strategic alignment for the larger workforce is broken, no amount of customer data, councils, or any other mechanisms can help employees generate ideas that create actual wins.
Another important issue raised was that innovation in comparatively younger GCCs who are new in India are most likely not Fortune 2000 firms. The choice to pursue innovation is limited because one may not have the resources – financial or otherwise.
The key here is to focus on the quality of talent and culture. These can make or break the organization. Younger GCCs must hire the right people who look at the product and align it with their ambition to build for the world. GCC leaders must develop and nurture these employees, as they have a high degree of ownership towards their work and tend to stay in the organization much longer. These will be the ones shaping the company’s future.
Investing in a passionate workforce is also critical as teams will most likely have limited resources compared to larger peers. As a result, the cost of start-ups failure is significantly higher. In such a construct, team quality has a visible impact on the odds of success of a project.
A few leaders also stressed the importance of nurturing talent differently to achieve a balanced innovation portfolio.
Not every team in an organization will innovate at the same scale and pace. Some teams can move very fast and innovate well up to a certain point, while others operate at a different speed and are great at scaling solutions – like segmenting teams into their strengths for 0 to 1, 1 to 10, and 10 to 100.
Hence, if GCC leaders want to build well-operating innovation machinery, they need to take the horses-for-courses approach, i.e., ensure that the employees that thrive in a particular part of the innovation cycle, stay in that part the cycle and recognized for it. One often misses this and tries to fit a square peg into a round hole.
It is essential for leaders to not be overzealous and set up improbable expectations with their teams and sponsors. In most cases, improbable targets coupled with high investments reduce the odds of success. On this account, a few leaders shared their journey of initially focusing on incremental Innovation, building evidence with HQ, building confidence within the GCC, and then aiming for breakthrough or transformative innovation.
Not all organizations have clear and well-defined processes to enable innovation. Leaders repeatedly highlight the importance of structured innovation programs within the company.
Leaders from the healthcare and aviation sector, which are highly regulated, spoke about their construct – wherein the organization is keen to innovate to stay ahead of the curve, but they have a very low-risk appetite. They must maintain high quality, high reliability, and 0.001% error probability. In such an environment, it’s near impossible to experiment with new ideas.
However, a structured process offers advantages. It offers a highly controlled environment that enables individuals to take risks, manage unexpected effects, and learn and iterate through multiple innovation lifecycle stages. These programs improve the pace of experimentation, improving the odds of delivering meaningful business impact in the long run.
A usual manual for organizations to prioritize opportunities is to run VOCs (Voice-of-Customers). While this is a good practice, a few leaders highlighted the caution one needs to exercise while following this manual. It is essential not to let go of an idea because of a few rejections, and encourage employees to build on their vision, as they may have just come up with insights for your next big business. Leaders shared experiences where some of their ideas got a no-go in pretty much every VoC, but eventually, it turned out to be a USD 200 Mn business.
What’s vital to understand is that taking forward an idea without any customer validation will not work. Being entirely dependent on it is not feasible either. It is essential to maintain a balance. Sometimes ideas need a few modifications or an entirely different customer base than the targeted one.
One of the leaders called out the distinction in Steve Jobs popular quote – “People don’t know what they want until you show it to them”. A commonly missed aspect of this quote is that customers know their problems, but that does not mean they know the solution.
There is a clear need to develop the innovation muscle of GCCs in India and offer it as a core value proposition. But developing this muscle requires a fundamental shift in the way GCCs operate. Leading such a transformation will not be easy especially given the constructs of a GCC. However, we always need to start somewhere.
At Zinnov, we have worked with GCCs to systematically build a Culture of Innovation with a guided maturity framework.